Subj: ( BW)(TX-GATA) GATA Says Much of U.S. Gold Reserve is Encumbered
Date: 8/15/2001 7:09:38 AM Pacific Daylight Time
From: LePatron@LeMetropoleCafe.com

Le Metropole Members,

( BW)(TX-GATA) GATA Says Much of U.S. Gold Reserve
is Encumbered

Business Editors

DALLAS--(BUSINESS WIRE)--Aug. 15, 2001--"Hard as
it is to fathom, it appears that much of America's gold is essentially gone or in severe jeopardy," says Gold
Anti-Trust Action Committee Chairman Bill Murphy.

Murphy points to an astonishing discovery by
GATA consultant James Turk in his new essay, The Mystery
of the Disappearing SDR Certificates, published at
the GATA Internet site, http://www.GATA.org. An SDR, which
is acronym for Special Drawing Rights a.k.a. 'paper gold,'
is a monetary instrument issued by the International
Monetary Fund, representing special drawing rights for
one 35th of an ounce of gold.

Turk has discovered that the SDR certificates
on the books of the U.S. Treasury Department's Exchange Stabilization Fund have dwindled from 9,200 millions to
2,200 millions.

-0-
*T

Exchange Stabilization Fund

(Assets) (Liabilities)

(in millions)

SDR SDR

Holdings Certificates

Dec. 1998 10,603 9,200

March 1999 9,682 8,200

June 1999 9,719 8,200

Sept. 1999 10,284 7,200

Dec. 1999 10,336 6,200

March 2000 10,335 6,200

June 2000 10,444 4,200

Sept. 2000 10,316 3,200

Dec. 2000 10,539 2,200

Source: US Treasury Bulletin

*T

Turk explains why this is important:

"The U.S. Gold Reserve does double duty. It
sits in the vaults at Fort Knox and the other
depositories, but the U.S. Treasury has issued Gold
Certificates against it. The Federal Reserve owns
these Gold Certificates, giving the Fed a claim to
the 261.6 million ounces in the U.S. Gold Reserve.
Simple enough, and the same transaction is used for
'paper gold' -- the SDR's -- with just one small
difference. The U.S. Treasury has transferred its
SDR's to the Exchange Stabilization Fund (ESF), so
the ESF and not the U.S. Treasury issued the SDR
Certificates now owned by the Federal Reserve."

Turk continues:

"The ESF by law cannot issue more SDR
certificates than it has SDR's. The largest amount
of SDR certificates outstanding was 10,168 million
in December 1995, a significant date, because I
have contended all along that government actions
that have depressed the gold price began in 1996,
which is the same year that the SDR certificates began
to decline. From this peak to the present, the
SDR certificates have been reduced by 7,968 million.
Given that there are 35 SDR's per ounce of gold,
this reduction in the SDR certificate account
equates to 227.7 million ounces, or 87 percent of
the U.S. Gold Reserve...."

"Everything is fitting into place," Murphy
says. "It appears that the SDR certificates are being
used by the ESF to hide its gold transactions from
the American public."

GATA has long claimed that central bank
gold loans are two to three times the commonly accepted
5,000 tonnes cited by the gold industry. "Eighty-seven
percent of the U.S. gold reserves is very close to
7,000 tonnes, which would increase to 12,000 tonnes the
official sector gold out on loan in some way,"
Murphy notes.

"No wonder former Treasury Secretaries
Robert Rubin and Lawrence Summers and current Secretary
Paul O'Neill have refused to directly answer members
of Congress regarding their gold market queries,"
Murphy goes on. "The ESF reports only to the president
of the United States and the treasury secretary, which
means that these men are very aware of the mechanics of manipulating the gold price."

"This is most disturbing," Murphy says,
"because there is a pattern of deception, first by
treasury secretaries not answering pointed questions and
then by others who apparently are involved in or
knowledgeable about the U.S. government's intervention
in the gold market and who are conveniently forgetting the facts."

Murphy cites a June 8, 2001, memo to Fed
Chairman Alan Greenspan from Federal Reserve lawyer
A. Virgil Mattingly, who denies any knowledge of gold
swaps, even though the transcript of a 1995 meeting
of the Federal Open Market Committee records him as
using those words to explain the authority and apparent
activity of the ESF.

Then in an August 7, 2001, letter, John P
Mitchell, deputy director of the U.S. Mint, offers no explanation why 1,700 tonnes of U.S. Gold Reserves
stored at West Point, N.Y., were reclassified in
September 2000 from "Gold Bullion Reserve" to
"Custodial Gold." In May this year all 7,700 tonnes
of the U.S. gold reserves in Treasury Department
depositories were reclassified as "Deep Storage Gold."

Mitchell says the U.S. Gold Reserve was
"not reclassified -- it was renamed to better conform
to our audited financial statements."

"But Mitchell offers no explanation why
that change is being made now. Could it be that these
changes to conform to accounting principles were necessary because of the dramatic reduction in SDR Certificates and encumbering of the U.S. Gold Reserve?" Murphy asked.

"This is most frightening," Murphy says. The
U.S. Government defaulted on its gold obligations in
1933 and 1971. Could it be happening all over again?

--30--ltw/da*

CONTACT: Gold Anti-Trust Action Committee

Bill Murphy, 214/522-3411

Fax: 214/522-4432

LePatron@LeMetropoleCafe.com

KEYWORD: TEXAS DISTRICT OF COLUMBIA

INDUSTRY KEYWORD: BANKING GOVERNMENT

SOURCE: Gold Anti-Trust Action Committee

Laura Wood
Business Wire/Dallas
972/458-9555
fax 972/458-7646

Le Metropole Cafe

All the best,

Bill Murphy
Le Patron
www.LeMetropoleCafe.com